Earnings Report Impression

Just a little ‘stream of consciousness’ report on my impression of earnings reports so far. That is, no links or cites.

There’s a pattern shaping up in earnings reports. Things you and I might buy, sales are down and profits falling. Up? Military and Armaments companies that sell to the government. Up hard over the last year, but now flattened and threatening a fall on profit not materializing to support the run up, medical and insurance companies wanting to cash in on Obamacare Monopolies…

Some specifics:

GM – everyone excited as profits are up! On falling sales… (Oh Dear… )

Apple – Failed to have sales growth and profit growth as expected. Talk of “is it a commodity now”?

Chipole – MAJOR miss with 95% or so drop in profits (lots of give aways to get volume back up, but not working)

Retail in General – falling sales…

Arms Merchants – great profits on lots of sales (Saudi Deal anyone?…)

It’s an interesting pattern. “Friends of Government” and “Suppliers to Government” sales up. Tax payer buys, sales down. Hmmmm….

So just how long can that pattern continue?… I’d say to about January 20th or so.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Economics - Trading - and Money and tagged , , . Bookmark the permalink.

20 Responses to Earnings Report Impression

  1. Larry Ledwick says:

    Hmmm profits up but sales falling – that can only mean they are cutting costs drastically.
    Can you spell layoffs, delayed maintenance, reduced investing in R&D, corner cutting on materials, late paying vendors etc.

  2. John Robertson says:

    Or quality control, the absolute lack of I mean.
    Profits go up temporarily when you discard all checks and balances required to retain your customers trust.
    So the product is sold cheaper at higher profit for the manufacturer.
    But once a contractor has endured endless lost time costs, caused by install of manufacturer defective equipment, they will not buy that line again.
    The mantra from our chain stores, “Just bring it back,we will give you a new one”.( that also does not work.)
    Wonderful policy,as they assume your time is for free, to waste on their junk.

  3. philjourdan says:

    What an astounding feat of prognostication! The exact day of demise. Only a real cynic could do such a thing. I am only pissed you beat me to the line. ;-)

  4. p.g.sharrow says:

    The MASSIVE tax increase of the “Affordable Care Act” is starting to kick in on the middle class. Expect the economy to take a hard set back over the next 3 months as money on the street vanishes into that rathole. If Trump, relief will come. If Clinton, Depression…pg

  5. Gail Combs says:

    John Robertson says: “Or quality control, the absolute lack of I mean.”

    AMEN!!!
    Yesterday I was in a long wait at Soc Security. (Gave a ride to a friend) The guy next to me was another QC eng and we had a long talk about the major drop in quality, ISO 9000, Just-in-time and trying to get management to agree to doing at least some incoming inspection.

    Dr Demming must be rolling over in his grave.

  6. Gail Combs says:

    P.G. Sharrow, I am already noticing the effects. We had very few customers in September/October our busiest season and we just had 4 customers back out at the last minute. I showed up and no one was home. This just doesn’t happen in my business and certainly not 4 customers in 3 weeks.

    Since we do entertainment for birthdays we see the effects of an economic down turn or loss of consumer confidence before anyone else since we are a bit higher in price than a clown or bounce castle.

    Time for a non-refundable deposit to hold the time.

  7. E.M.Smith says:

    Amazon drops on earnings miss… Amazon! Down to $777 $775 as I type…

    The standard excuse for all of the rest of retail dropping is that folks are shifting to online and Amazon… this puts a bit of a lie to that… (though they are getting more into “cloud” services and media provisioning, so some drill down would be helpful…)

    But the simple fact is that we’re talking Amazon in the soup.

  8. Larry Ledwick says:

    Amazon has been one of the few stocks that have been holding up the market, if that leg of the stool cracks others might be close behind. The so called FANG group, Facebook, Amazon, Netflicks and Google.

  9. Gail Combs says:

    Shadowstat has an interesting collection of information
    June 8, 2016 PUBLIC COMMENTARY ON UNEMPLOYMENT MEASUREMENT

    Participation rate (Labor Force as a Percent of Population) has been in a steady decline since 2008. See page 4

    Real sales is on page 7 and has been declining since mid 2012.

    CASS Freight Index for North America is on page 6 and has been declining since mid 2014.

    To put it bluntly the US economy has been in the tank since Obama took office. All of the charts dropped like a rock in 2008/9 and have been crawling along the bottom of the sewer ever since.

  10. cdquarles says:

    Remember that capital goods (of which money and services contribute, for they are production inputs just like physical materials) lead a general down turn and lead a recovery. [This is one way to know that there hasn’t been an actual recovery.]

  11. Bruce says:

    I read your post, word for word on another blog, I hope he at least asked first

  12. pg sharrow says:

    @Gail you asked “Who our politicians Clinton and Obama were working for?”
    http://www.foxnews.com/politics/2016/10/27/make-soros-happy-inside-clinton-teams-mission-to-please-billionaire-vip.html
    V.I.P Soros and company……..maybe…pg

  13. Gail Combs says:

    P.G. I think Soros is 2nd or third tier as are most of the Bilderburgers.

    These are also second or third tier
    Financial Core of the Transnational Corporate Class These are the “people on the boards of directors of the top ten asset management firms and the top ten most centralized corporations in the world.”

    The firms are picked from the paper The Network of Global Corporate Control

    Listing of top fifty Control Holders link

    My silly wild donkey guess is the top is the British and Dutch royal families and the Rothschilds with perhaps the Rockefellers based on their control of Royal Dutch Shell and BP and the fact that Shell has it’s finger prints all over Agenda 21 and the World Wildlife Fund.

  14. H.R. (off saltwater fishing in S.C.) says:

    @Bruce

    ????????? You’re a little light on details such as who, what, when, where, and maybe why. ‘How’ would be answered by ‘copy and paste,’ but the other questions typically answered in expository writing need to be fleshed out. TIA

  15. Larry Ledwick says:

    Financial times on Amazon and why they missed earnings estimates.
    https://www.ft.com/content/4bac4fe6-9c7a-11e6-a6e4-8b8e77dd083a

    @Bruce – as noted above – – throwing out a comment like that with no detail is really not very useful, if nothing else a link to the page where you found the post would be helpful.

  16. E.M.Smith says:

    There are many sites that scrounge other folks stuff. Some as quotes, others as a rip off. Nobody has asked permission. Nor do I see a pingback…

  17. Gail Combs says:

    I forgot there were calls for Trump supporters to boycott amazon.

    Petition to boycott Amazon

    Jeff Bezos is the owner of Amazon. Bezos, bought the Washington post for $250m. He has hired 20 investigative reporters to dig up dirt on Trump’s past and write a book on it. Supposedly a chapter for every year of his life in an effort to discredit Trump because Bezos is a Hillary supporter. Trump supporters need to boycott Amazon. If Amazon sales fall this next quarter, it would erase billions from the value of Amazon overnight, not to mention the book would be a flop anyhow…but just to get our point across. You mess with Trump, your messing with the silent majority!

    It was up at ConservativeTreeHouse months ago and even at Tony Heller’s in a comment just recently.

    I did not sign the petition but I have boycotted Amazon.

  18. E.M.Smith says:

    The Financial Times link just gives a nag to buy a subscription…

    http://www.investors.com/news/technology/amazon-alphabet-lumentum-gigamon-earnings-what-to-expect/

    Shows revenue increase met expectations but profit didn’t. Likely due to shoving cash at newer computer (cloud) business investments per the TV Biz news.

    @Gail:

    I think you have most of the players listed well, but I put more emphasis on Soros as the proximal direct influencer of recent events. The Rockefeller clan and Royals work more slowly and through leveraged others (except when they destroy another country via war…) as they don’t like the public spotlight on the unsavory bits…

  19. Skeptic says:

    In reference to “Bruce’s” comment and those chastising him; this short article appeared in the Borepatch blog 2 days ago.

  20. Larry Ledwick says:

    If you go to the financial times by googling the link you can get the whole thing (which irritates the crap out of me)

    Amazon shares fell 6 per cent in after-hours trading in New York on Thursday when the online retailer significantly missed earnings expectations in the third quarter, and forecast operating income of as little as zero next quarter.

    Investment in distribution warehouses, video content from top tier directors and actors and the engineering teams behind virtual assistant Alexa helped push operating costs up 29 per cent — and look set to continue into the holiday shopping season.

    Brian Olsavsky, chief financial officer, said it had opened 18 fulfilment centres during the quarter, the biggest growth in the delivery network since 2012.

    “We’re in a period of ramping up investment in the second half of 2016,” he said. “It is a big undertaking as far as space is concerned.”

    Amazon reported earnings per share of 52 cents, up more than 200 per cent from the same period last year, but far from the average analyst estimate of 78 cents for the three months to the end of September. Net income was $252m.

    Sales increased 29 per cent to $32.7bn, meeting the consensus forecast, with retail sales in North America up 26 per cent and international retail sales rising 28 per cent.

    Revenue from Amazon Web Services soared 55 per cent to $3.2bn, the biggest year-on-year leap in sales, as prices came down and AWS rolled out new features. The operating margin at AWS increased to 31.6 per cent.

    Amazon shares, which have risen 21.25 per cent so far this year, fell 6.2 per cent to $764.

    For the crucial fourth quarter, where retailers revel in holiday season shopping, Amazon forecast sales between $42bn and $45.5bn, up between 17 and 27 per cent compared with the fourth quarter of 2015. But it said it expected operating income of between zero and $1.3bn, compared with $1.1bn in the fourth quarter of 2015.

    During the quarter, Amazon also expanded its push into bricks-and-mortar retail, opening storefronts on the US West Coast where customers can pick up items, and launched its Echo speaker and voice-activated personal assistant Alexa in Europe.

    Jeff Bezos, founder and chief executive, said Alexa is improving, with more than 3,000 skills. “Because Alexa’s brain is in the cloud, we can easily and continuously add to her capabilities and make her more useful — wait until you see some of the surprises the team is working on now.”

    Amazon pleased the market last quarter when it appeared that its investments in Prime membership, to encourage loyalty from shoppers, and Amazon Web Services, were paying off. But it has now entered a new investment phase.

    Operating cash flow increased 49 per cent to $14.6bn for the 12 months ended September, and free cash flow increased to $8.6bn.

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